by author-contributor, Jane M. Orient, M.D., www.aapsonline.org
The Super Committee apparently ran into some Kryptonite, and was unable to perform a Superman-like impossible feat.
AMA president Peter Carmel, M.D., complained that the Joint Select Committee on Deficit Reduction missed a “unique opportunity to stabilize the Medicare program…for generations to come.” Really?
Even Superman couldn’t subtract $1.2 trillion from the budget gap by adding the $300 billion in spending required to restore a scheduled 27% pay cut to physicians. Now the cut may be 29% because of automatic sequestration, the default option if the Super Committee failed. Will your doctor still be there for you if this happens?
There’s a lot of talk about “changing the payment methodology,” as with ObamaCare’s magical Accountable Care Organizations. But unless one also just cuts the amount of payment, this is the equivalent of trying to fill a hole by moving dirt from one side of the bottom of the hole to the other.
Let’s take a look at that methodology. The AMA complains about the automatic “SGR” cuts. The Clinton-Gingrich Sustained Growth Rate formula, passed in 1997, is supposed to put a lid on total expenditures for physicians’ fees. Doctors might want to ask Newt Gingrich what he thinks about it now. Was it intended to cut spending by cutting the supply of doctors?
Even more importantly, it’s about time to take a look at the method for determining those fees—which is the AMA’s method.
Medicare’s “limiting charges,” its price-control system, is based on the Resource-Based Relative Value Scale (RBRVS). For economists, this is a form of the Marxist Labor Theory of Value. For practical people, the way it works is that a secretive AMA committee called the “RUC” (pronounced “ruck”—nobody remembers what the letters stand for) decides things like how many ingrown toenail treatments it takes to consume the same amount of “resources” as a gall bladder operation or a psychiatry consult.
A lot of the staff members in the doctor’s office do not help care for patients. They are there to file, and re-file claims, and figure out which of some 15,000 five-digit “CPT” codes to put on them to maximize payment. The systems gaming is about to become much more complex when doctors are required to use the ICD-10 system of nearly 70,000 diagnostic codes. Those are needed so government can tell whether patients got injured in the art gallery, bathroom of their mobile home, or prison kitchen. The AMA opposes ICD-10, which it does not own, but supports its cash cow, the CPT system, on which it owns a lucrative monopoly.
What if we forgot about the SGR diversion and just abolished the RBRVS? Without that, there is no need for codes. Would you miss them? If Medicare payments are less than the cost of care, forcing doctors to quit, why not reduce the cost of care? Why not do a radical administrativectomy? Cut the codes, not the patients.
Let doctors figure out for themselves what they need to charge, and let Medicare figure out what it can afford to pay without bankrupting the country. Doctors could stay in business and accept new Medicare patients; Medicare could cut expenditures even below the SGR target; and patients could find care. They might pay more out of pocket than they do now, depending on how much Medicare decided to cover, but they could decide whether it was worth it. And they might very well be paying less. They might flock to doctors who write their prices on a blackboard, like many restaurants do, instead of the ones who keep them hidden, as some very expensive restaurants do.
Some people wouldn’t like it: the ones who profit mightily from the complexity. Where would the AMA be without $70 million or more in profits from selling codebooks and licensing its codes?
Even Superman can’t defeat the laws of economics. But Congress doesn’t need Superman to repeal its own misdirected meddling in the economy and the practice of medicine.